Gross Revenue Retention
What is Gross Revenue Retention?
Gross Revenue Retention (GRR) is a SaaS metric that measures the percentage of recurring revenue retained from existing customers over a specific period, excluding any expansion revenue. GRR focuses solely on revenue losses from downgrades and churn, providing a clear picture of how well a company retains its existing customer base.
Unlike Net Revenue Retention (NRR), which includes expansion revenue from upsells and cross-sells, GRR isolates retention performance by answering a fundamental question: "If we stopped selling to new customers and stopped expanding existing accounts, how much of our current revenue would we keep?" This makes GRR a critical health indicator for SaaS businesses, as it reveals the true strength of product-market fit and customer satisfaction without the masking effect of growth from existing accounts.
For B2B SaaS companies, GRR typically ranges from 85% to 95%, with best-in-class companies achieving 90% or higher. A strong GRR indicates that customers find ongoing value in the product, experience minimal friction, and are unlikely to churn. Conversely, low GRR signals product issues, poor customer success execution, or fundamental market fit problems that no amount of new customer acquisition can sustainably overcome. This metric becomes especially important during economic downturns when expansion revenue contracts and retention becomes the primary driver of revenue stability.
Key Takeaways
Foundation of Growth: GRR measures pure retention performance by tracking how much recurring revenue remains from existing customers, excluding expansions—a GRR above 90% is considered excellent for B2B SaaS
Revenue Leakage Indicator: GRR reveals the rate at which revenue is lost through churn and downgrades, making it essential for forecasting and identifying customer success gaps
Product-Market Fit Signal: Consistently high GRR (90%+) indicates strong product-market fit and customer value realization, while low GRR suggests fundamental product or targeting issues
Economic Resilience Measure: During downturns, GRR becomes the primary stability metric as expansion revenue contracts—companies with GRR below 85% face significant growth challenges
Operational Priority Driver: GRR directly informs resource allocation between acquisition and retention, with low GRR requiring immediate investment in customer success and product improvements
How It Works
Gross Revenue Retention is calculated by taking the recurring revenue from a cohort of customers at the beginning of a period, subtracting any revenue lost through churn and downgrades during that period, and dividing by the starting revenue. The formula excludes all expansion revenue from upsells, cross-sells, or price increases.
The standard GRR formula is: GRR = (Starting ARR - Churned ARR - Downgrade ARR) / Starting ARR × 100
For example, if a company starts the year with $10 million in ARR from existing customers, loses $500,000 from churned customers, and $300,000 from account downgrades, the GRR would be: ($10M - $500K - $300K) / $10M = 92%. This means the company retained 92% of its base revenue, with 8% lost to churn and contraction.
Most SaaS companies calculate GRR monthly, quarterly, and annually. Monthly GRR provides early warning signals for retention issues, while annual GRR smooths out seasonal variations and provides a clearer long-term trend. According to SaaS Capital's annual survey, median GRR for private B2B SaaS companies ranges from 87% to 91%, with significant variation by customer segment—enterprise customers typically show higher retention than SMB customers.
GRR tracking requires accurate revenue recognition systems that can attribute revenue changes to specific causes (churn vs. downgrade vs. expansion). Many companies use their billing systems or data warehouses to calculate GRR by customer cohort, segment, and product line. This granular analysis helps identify which customer segments, use cases, or products drive retention challenges and where to focus customer success resources.
Key Features
Pure Retention Focus: Measures only revenue retention without expansion, providing an unmasked view of customer satisfaction and product stickiness
Leading Indicator: Declining GRR trends appear months before they impact growth metrics, enabling proactive intervention
Cohort Segmentation: Enables analysis by customer segment, acquisition channel, and product to identify retention patterns and risk factors
Forecasting Foundation: Provides the baseline retention assumption for accurate ARR forecasting and financial modeling
Benchmark Comparability: Standardized calculation methodology allows meaningful comparison across companies and industry benchmarks
Use Cases
Pipeline Forecasting and Revenue Planning
Revenue operations teams use GRR as the foundation for annual recurring revenue forecasts. By establishing a baseline retention rate, RevOps can accurately model how much existing revenue will carry forward and calculate the new ARR required to hit growth targets. For example, a company with $50M ARR and 90% GRR knows they'll start the next year with $45M from existing customers, meaning they need to generate $5M just to maintain flat growth. Sales leaders use this analysis to set realistic new business quotas and determine required pipeline coverage ratios.
Customer Success Resource Allocation
Customer success leaders use GRR segmentation analysis to identify which customer cohorts, verticals, or use cases show retention challenges. If enterprise customers show 95% GRR but mid-market customers show 85% GRR, the CS team can reallocate resources, create segment-specific playbooks, and adjust onboarding programs. This data-driven approach ensures customer success investments focus on the segments with the greatest retention risk and ROI potential.
Product Roadmap Prioritization
Product teams monitor GRR by feature adoption cohort to understand which product capabilities drive retention. When customers who adopt specific features show significantly higher GRR than those who don't, it signals which capabilities to emphasize in onboarding, marketing, and future development. For instance, if customers using API integrations show 95% GRR versus 80% for those without integrations, product teams can prioritize making integrations easier to implement and promote them more heavily during onboarding.
Implementation Example
Here's a comprehensive GRR tracking dashboard framework that revenue operations teams can implement:
GRR Calculation Model
Metric Component | Formula | Example Value |
|---|---|---|
Starting ARR | Beginning period recurring revenue | $10,000,000 |
Churned ARR | Revenue lost from canceled customers | -$500,000 |
Downgrade ARR | Revenue lost from contractions | -$300,000 |
Gross Revenue Retention | (Starting ARR - Churned - Downgrade) / Starting ARR | 92% |
Expansion ARR (excluded) | Revenue from upsells/cross-sells | $800,000 |
Net Revenue Retention | (Starting + Expansion - Churned - Downgrade) / Starting | 100% |
GRR Monitoring Framework
GRR Benchmark Framework
Company Stage | Target GRR | Best-in-Class | Warning Threshold |
|---|---|---|---|
Early Stage (<$10M ARR) | 85-90% | 90%+ | <80% |
Growth Stage ($10-50M ARR) | 90-93% | 93%+ | <85% |
Scale Stage ($50M+ ARR) | 92-95% | 95%+ | <90% |
Public SaaS | 93-97% | 97%+ | <92% |
This framework enables revenue teams to track GRR trends, identify retention risks early, and align customer success initiatives with revenue retention goals. The segmented approach reveals which customer cohorts drive overall GRR performance and where intervention is needed.
Related Terms
Net Revenue Retention: The complementary metric that includes expansion revenue, providing a complete picture of customer revenue dynamics
Churn Rate: The percentage of customers or revenue lost over a period, directly impacting GRR calculations
Customer Health Score: Predictive metric combining usage, engagement, and satisfaction signals to identify at-risk accounts before they impact GRR
ARR (Annual Recurring Revenue): The foundation metric for GRR calculations, representing total contracted recurring revenue
Customer Lifetime Value: Long-term value metric influenced by GRR, as higher retention rates directly increase CLV
Revenue Operations: The function responsible for tracking, analyzing, and improving GRR across the customer lifecycle
Expansion Revenue: Revenue growth from existing customers through upsells and cross-sells, excluded from GRR but included in NRR
Frequently Asked Questions
What is Gross Revenue Retention?
Quick Answer: Gross Revenue Retention (GRR) measures the percentage of recurring revenue retained from existing customers over a period, excluding expansion revenue—typically 85-95% for B2B SaaS companies.
Gross Revenue Retention isolates pure retention performance by tracking how much of your starting recurring revenue remains after accounting for churn and downgrades, but before adding any expansion revenue. This provides an unmasked view of customer satisfaction and product stickiness, making it a critical health metric for subscription businesses.
What's the difference between GRR and NRR?
Quick Answer: GRR measures only revenue retention (excluding expansions), while NRR includes expansion revenue from upsells and cross-sells—NRR can exceed 100%, but GRR cannot.
The key distinction is that GRR answers "How well do we retain existing revenue?" while NRR answers "How much do we grow revenue from existing customers?" A company might have 92% GRR (losing 8% to churn/downgrades) but 115% NRR because expansion revenue more than offsets the losses. Both metrics are essential: GRR reveals retention strength, while NRR shows total customer revenue performance.
What is a good Gross Revenue Retention rate?
Quick Answer: For B2B SaaS, 90-95% GRR is considered excellent, 85-90% is acceptable, and below 85% signals retention challenges requiring immediate attention.
Benchmark GRR varies by customer segment and company maturity. Enterprise-focused companies typically achieve 93-97% GRR due to longer sales cycles, higher switching costs, and deeper integrations. Mid-market companies often see 88-93% GRR, while SMB-focused businesses struggle to exceed 85% GRR due to higher churn rates. According to OpenView's SaaS Benchmarks, public SaaS companies average 93-95% GRR, setting the gold standard for the industry.
How do you calculate Gross Revenue Retention?
Take your starting recurring revenue for a cohort of customers, subtract revenue lost from churn and downgrades (but not expansion revenue), divide by the starting revenue, and multiply by 100. For example: ($10M starting ARR - $800K lost) / $10M = 92% GRR. The calculation should track the same cohort of customers throughout the period, excluding any new customers acquired during that time.
Why does GRR matter more than NRR during economic downturns?
During economic contractions, expansion revenue typically slows or stops as customers reduce spending, making NRR less reliable as a health indicator. GRR becomes the critical metric because it reveals the true retention floor—how much revenue you'd keep if all expansion stopped. Companies with high GRR (90%+) maintain revenue stability even when growth slows, while those with low GRR face accelerating revenue decline as expansion revenue contracts and retention losses compound.
Conclusion
Gross Revenue Retention represents the foundation of sustainable SaaS growth, measuring how well companies retain their existing customer revenue before accounting for expansion opportunities. For revenue operations teams, GRR provides the baseline assumption for all financial forecasting and growth planning, revealing whether the business can build on a stable foundation or is losing ground to churn and contraction. Customer success organizations use GRR as their North Star metric, with segmented analysis identifying which customer cohorts, products, or use cases require immediate intervention.
Unlike Net Revenue Retention, which can mask retention problems with strong expansion performance, GRR provides an unvarnished view of customer satisfaction and product value delivery. Marketing and sales teams should understand that GRR directly impacts required pipeline generation—every percentage point of GRR lost requires additional new business just to maintain flat growth. Product teams monitor GRR by feature adoption cohort to understand which capabilities drive long-term retention and deserve continued investment.
As SaaS markets mature and competition intensifies, GRR excellence increasingly separates industry leaders from struggling competitors. Companies achieving 93%+ GRR demonstrate strong product-market fit, effective customer success execution, and sustainable business models. For teams looking to improve retention performance, start by implementing robust Customer Health Score systems that identify at-risk accounts early, segment GRR analysis by customer cohort to find patterns, and align product roadmaps with retention drivers rather than just new feature requests.
Last Updated: January 18, 2026
